BKU - Earnings call transcript Q4 2024

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Operator

Good day, and thank you for standing by. Welcome to BankUnited Fourth Quarter and Fiscal Year 2024 Earnings Call. [Operator Instructions] Please be advised, today's conference is being recorded. I would now like to hand the conference over to your speaker today, Jacqui Bravo, Corporate Secretary. Please go ahead.

Jacqueline Bravo

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

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

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

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

Raj Singh

Thanks release you an Jacqui, through you. very an I and day. for good earnings more. year, exceptionally busy us. quarter everyone. try Welcome, this in or a good it. BankUnited. is for to gleaned know strong joining less. thank finish earnings it the hour pretty wrap reporting We're hour I'm a to We'll have up has already year out of lot the a for last or been The sure a

that don't #X. you page a new board see slide to that busy would our day, That quarter. over one And get of put we've out, some Slide by you lays which year the else, the for not and last if what we're next we'll read well. is gist anything all like it put you as is, added to be to year, just that the and company, progress of say there's going we of numbers deck, it's the said, you'll only the last out on, Since on, guidance don't quarter, as focus supplemental get we've provide we kind made page but information in the you if focus all like I It today. would out I if a only quarter that's also, a

X special numbers have assessment important see charge those the quarter over I actual the FDIC in the little here, for will take will does the And numbers. X a fourth out ROE XXXX. ROA of the way, you and adjusted It more say? And And what's by time. quarters. the bit net numbers is interest Page lays but in last that EPS, So quarter these what of margin, important, for are trend every been

quarter EPS margin, announcing third to then, $X.XX. are second to we fourth we're of and X.X% X.XX%, today. to is what up points what to X% up X.XX%, third in to from to was Our the was a grew XX which a which was back we're That's quarter $X.XX, first was to at X.XX%. quarter quarter our then, ROA second XX today, actually at was of down went adjustment. -- $X.XX, fourth this Likewise, the was ROE, and little X.X% 'XX bit basis $X.XX, just quarter the announcing quarter in went that's 'XX, was quarter. X.X% today. X.XX% at quarter $X.XX, Went And XX first X.XX% to XX XX, to to X.X% stayed announcing which in seasonal

about or of of So has lot last this, look we year time eventually, to delivering X on a if out a matter -- on we things things there's X we it no And that lot down how this to things. at. a scorecards at and year. these metrics our boils talked been you you this the deliver phenomenal set all look that of But to

So you for I'm ask $XX.X estimates net say, the your -- before and told I are pull What $X.XX. what Leslie me day she is income think yesterday, consensus." could us? turn up very "Please, EPS consensus in happy million, always a And was came I the $X.XX the share. to the report to at earnings, I

the I'm is where So consensus significantly last $X.XX $X.XX above than that was. And better the happy reported we we're quarter.

well. So great the over as progress quarter

best deposits, own outperformed even really based on place the going margin of out X.XX% a months much they mostly last lose higher did X.XX% was seasonally quarter. thought difficult at the But that's We from we but expectations is quarter, up was our did did quarter better. X much quarter our other from came those, story internal to deposit quarter. thought for basis lose better at be this we assumptions Fourth better. Now on actually and in the certain because flat And this really because to We deposits margin. on X the we businesses ago made to points businesses came of deposit and side, our than we we where much would. our

So deposits quarter. X.XX%. the on nicely. to deposits came has down we declined last deposits, down of points was cost quarter. quickly spot also, basis, X.XX% a the by very going through came basis X.XX% X.XX% X.XX%. interest-bearing basis XX It from X.XX% from to down Cost last from And of points actually It came XX to

shout I up, to $XXX it some actually the business instead that margin is better-than-expected million, down, what went was to all in going out feeds that it story despite the who average which lines of NIDDA, our up just headwinds that. seasonal just mentioned Now And all contributed our of into here. to businesses,

a So number them of are the line. on

was million. NIDDA declined was flat, only ending basically by $XX Our

Loans our better were and expecting. leasing down mostly of much portfolios noncore we and than million, what you So because in franchise that some talked runoff resi were the finance. $XXX like of already to we've

for it which billion, So Total taking if for grew has I billion the NIDDA $X.X grew priority billion. wholesale was a funding, look down $XXX for by back And grew DDA down, by over the year. $X.X by nonbrokered us, been also grew big and $X.X noninterest the -- deposits year. year, million so

$XXX resi noncore and and the year. loan by for by And $XXX Core CRE grew million. declined C&I portfolios million

stands ratio year it at looks loan-to-deposit close was Our ago, A XX%, XX.X%. to still now I was XX.X%. it Credit think solid.

think points. this year, we at net charge-offs I clocked XX basis

SBA seen are NPLs reserved and very loans. number. go while, for NPAs bank, X loan, we've still up a that office is think quarter, it. commercial coming manageable attributable the that, I basis fantastic XX a a $XX are For portion but excludes this points. all we of million This that for properly guaranteed at to did

TCE it at Capital. AOCI per at And up. X.X%, CETX is $XX.XX. to It's and keeps it's at value run now then include and you TA at book is ratio the share going again, XX%. XX.X%. if

So I about time for say give let is Leslie, I for did talk ago, kind Tom -- just what year we year, guidance guidance a the to end and give did over where this year. step to want and hand quickly back before before But of this up. I the we me it we

grew nonbrokered We digits, we we digits, said deposits last at balance and we had deposits essentially total We And like X%. total yes, mid-single said said down would more. that's were X%. the grow time, -- grow we double that We flat, sheet at XX.X%. what at grew We year, slightly X%. NIDDA that they would remain happened. did, grow grew at So deposits, said

fourth the up be it in X.XX%. was we would guided X%. increase down we we said that We pay the a that by funding, also wholesale mid-single-digit We NII, that margin would down -- there'd down up continue up ended end it paid where Xs in said $X.X high billion. by We to the at pay quarter,

We expenses also be digits. that said mid-single would

FDIC at the came assessment, Excluding it X%. out

our we continue will Loans, at loans Production payoff we mostly we be surprised also bit. this, came the missed points. basis along basis we which commercial we what high XX points. up single We the lighter will much to the in way, the And single actually at be up commercial year -- said which predict, are just higher. There will loans the It's a the because had were ended us. XX much we digits. would by be total It side, fine. that than said payoffs, year started thought, that initially digits did. little build and low little ACL, We was to harder on a

they terms in to it And said in very, we words, results makes EPS ROA, ROE, basically as of as me it everything moving that able very substantially we all other in So happy. were deliver, have. all

So a has been this good year. very

digits the growth the NIDDA, year, I'm grow I We will one want metrics. in give last so guidance year, that us has guidance important feel -- should grow in to continue achieving deposits keep to double on down same down of it. And next no this for margin, we'd on what of we is strategy. changes the improving our in Total still gave digits. paying is major much down again. moment most well. so like vu want improve to driver the for it left NIDDA, we'll paid been a like to the profile be you and side to. pay the sheet much deja of But probably going as and Now not that because Number wholesale. right that the priority which balance mid-single there's We terms fundamental will to

this in and year will growth expenses. margin, should total the And similar year, of X%. to the get will end CRE Loan later sometime be half growth, that growth decline to year again, guidance Expenses, that going year, same will it somewhere resi we beyond digits. exactly what past grow happen, up get as -- noncore continue between. And but it's hard it on will we're single and mid-single say and that. That's in commercial we should hopefully last and when X% to to will last high digits later in

So and remind year And next both point is deposits finer will chart time and show in the able to Leslie we've if do our out, seasonality and business. the a even are we're X better Page it, able this all to one you there want hopefully those come put you year. be that at numbers a way the probably things next to our deliver I in I'll like lending. to showing to we on laid again

that. just quarter and half. in year. of third And business loans the fourth so stronger aware be to are less Deposits given the generally end are first the underwrite of being the the in first the generally second, of not a one difficult half second quarter, much So year, new

over I anything, Tom. I'll than it other Tom? But that, Leslie? missing turn am you, to

Thomas Cornish

Raj. you, Thank Yes. Okay.

So a bit first. little about loans let's talk

a in CRE mentioned, $XX As resi Raj municipal Raj $XXX the by finance by total, $XXX quarter. by segments million. by as down and were grew million. mentioned, and warehouse equipment were franchise million was million. Well, combined $XXX up Core C&I loans down this Mortgage

happy fourth of the commercial or banking, for pretty grew on a X% really about across business an all and X.X% year C&I long. the For basis. with good commercial was by would say course were annualized year banking, segments, all quarter, production small the the of our production corporate CRE. I year, core It that segments we

happy finance into That year year. to the Raj impact It's did from and some kind when we as combined C&I predict. this and sheet. with As quarter $XXX we we mentioned, up residential a basis, continue ebbs flows. the very million. year-to-date the was On And left-hand were But up $XXX of all portfolios payoffs as will that have and declined back our production the we're see was on municipal look repositioning warehouse Mortgage think side million. by from a first mentioned, total was a CRE down And at million. of and perspective, $XXX pipelines. combined this Franchise difficult the all $XXX quarter million. of the Raj equipment, the balance a consistent strategy

good Overall, still we're CRE C&I year. growth about optimistic and seeing growth next good

We economy, is very segments markets going continue as in. think operate in that in to I we very to good operate markets. overall And be we it, favorable and see the the the

in opportunities encouraged continue for we we XXXX. growth So that pipeline to be see by the

XX supplemental of A few on CRE. you minutes through refer Slides XX deck. the I to

XXX% It's total of bank's CRE and exposure the XX/XX/XX. of totaled loans capital. Our risk-based XX%

we while medium total accretive have XXXX we portfolio. the ratio on based XX, risk-based banks total loans XXX%. the XX% still bank range Comparatively for $XXX of growth, CRE to of modest CRE billion was call had was and a to data, capital medium billion September the good in moderate So report loans -- level $XX

can a our of an bank, it's to compared peers, perspective. still, see, part important while lighter from As you it's balance

December At portfolio was average X.XX, weighted the weighted was Tri-State CRE LTV portfolio York area. the was average the New XX%. the of DSCR was XX% XX% to Florida, in in And XX,

that relates continue So to carefully. we it to as office, monitor

companies and going signs even -- everybody on to bit abatements the little back of activity, abatement new general and incrementally the office. We quarter in the lot There's of last a leasing in are in of terms the positive roll-offs have that in board seeing trend shortening leases. towards across reads a

So quarter. see at analytically. about portfolio the did we a have this point, nonperforming think for And you tick been I up in over X,XXXx loan one this

be while of period have to to working to sponsors. relatively most it for identified to are be over continues rest and a the small challenge we have the think We've Generally, loans there it But of the of that part, as the company. we quality level that it. very challenge some very could think relates think perform modest But will we a been everything we the that we number loss CRE. time, as of to content office well providing has any relates with closely. portfolio it And

in LTV are York. that XX. additional XX% service points exposure, component average Florida, with the was office-related debt at includes stabilized weighted the Of The million December office year. was total medical portfolio December CRE of $XX last X.XX weighted area. The portfolio only of New average that of coverage an XX. in total were portfolio the at million construction office billion, portfolio in York XX% New a grew data $XXX of ratio of office XX% We the $XX That's was had $X.X $X.X office. The that million in the predominantly really or suburban, billion, Tri-State the XX% and

It's basis see, you a pretty It's that number at good is X.XX pretty from number. the of actually year. been point previous can up the most as stable for quarter. X So

next we more XX generally of million next Rent So off rate. of of mature XX% least that office the trends, positive major is loans things of are the months. we're more in in abatements XX the months markets are, that $XXX and million in, is in fixed stability, seeing the portfolio. all $XXX rolling only favorable. this the rollover at

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

occupancy companies of Northeast, of the in ratios the In showing in and market. in across the Generally, in much Florida is and the improvement it's into coverage another, new-to-market what to the the from levels overall number positive building of activity we it majority for submarkets. signs a the coming are be But not service new-to-market see Southeast, continued some is debt activity. said, our one again, to market you which is I more see Generally, and portfolio As new tends tenants the Florida, where as healthy leasing portfolio. Texas companies Southeast. moving strong market,

we've only million, of relatively related total portfolio office XXXX, the $X.X so Since had to loans. in minor, charge-offs X

ultimate content the amount loss the be we is of While determined, manageable. exact pretty it still obviously to see

substandard Raj beyond a X office This of perform to category $XX a As long Overall, CRE that had portfolio time. very mentioned, It's a continues loans related well. quarter. was these this the not we we've in nonperforming X following a surprise was CRE by been to loan increase that to million rating us. loan couple for

deposit quite optimistic front, the getting we're On into XXXX.

of expect strong couple bit see We the I seasonal. good. of Strong pleasure hit new celebrations getting really X very looks for activity the a in was that a our are We new I quarters. relationship, nice over activity, and account in wonderful general, the quarters. new great relationship into couple And account first deposit strong activity milestones had last for teams pipelines, very to attending have pipeline of XXXX. do think growth overall Raj have

over I turn that, to with So Leslie. it would

Leslie Lunak

grew income the Adjusting year. million of the per net out for the we're Tom. assessment, pretty was proud $X.XX share To that. impact Thanks, by quarter special FDIC the of XX%, or net $XX.X income so reiterate, for

about margin increased deposits. on the for And expectations, linked by We X reducing NIM the quarter. interest-bearing million. exceeded was to forecasted quarter quarter, $XXX talk Raj NIM cost growing basis. we to than the interest up the and NIDDA progress a X% made million The points That's being average better Turning income basis mentioned, flat quarter. from $X.X guided as income. or for last interest interest of X.XX% X% net and bit X.XX% net our little to Net annualized an

In was non-maturity XX XX, the deposits through ]. X, the on fact, for XXXX [ XXXX, period beta January September interest-bearing realized

that's think good. pretty we So

The from X.XX%, deposits -- to cost X.XX% while from X.XX% average declined rate of X.XX% from spot and of to X.XX% to interest-bearing total declined from the average deposits cost X.XX%. the

As X.XX% rate expect, average loans are to declined on you'd from securities the the on yield These largely from and floating yield X.XX% portfolios. to X.XX% X.XX%. declined average

really attributable that primarily. coupons was resetting So down to

rate continue obviously forward, floating down rates to to will assets reprice decline. Looking continue if

more was asset-sensitive. fourth in than the expect the the balance quarter, to cost static reduction of assets remains NIM the do funding composition the increase both We of of and as The offset mix sheet modestly by XXXX course this For improve. deposits. over the continues to the

As along, while I margin asset-sensitive, is expect it And on to we deliver modestly delivered year. we've all think continued improvement sheet been static that sheet on year, is this predicated we've balance the efforts. again and saying balance transformation next on

do A portfolios total guidance deposits, but mid- an in the we mid-single-digit couple expect we C&I digits. be single probably and other noninterest-bearing deposits. in of expect demand the again deliver low we core can high We to up increasing growth in single up underlying to think things double-digit CRE in solid the be NIM. total to digits, Loans and growth aggregate

are the that those those So trends. things underlie some of

-- production in a exact perspective first that commercial the deposits over is will half quarter half the opposite. in back Usually, it Loans quarter of the and remind the the back some the Generally, see half. I lowest stronger year. headwinds the you are seasonal ramps there of from the we first is are the in up and seasonality year, we business.

challenged see of have the of we to first little particularly that, XXXX, from some points roll-off the to X% is As margin end And going basis the in do of result X of to X quarter. the a But expect by first that quarter pressure hedges. of a year. resulting the more bit expansion we're

see on would we about the -- but to individual over year. focused think So say I'd that, all of I summarize the expect get don't so trend to quarters,

the net start decreased economic The main was reserve. points the and the supposed quarter on partially CRE the the that's ratio of specific related reserve was The ACL this at provision and office and reason provision how basis loans to was of and from to to ACL ACL At for was increase X.XX% The ratio year. year, The the the end reserve this the to quarter X.XX%. the the for decline $XX then Turning million. commercial X.XX%. them XX was X.XX% work. losses materialize. reserve it's an We charge-offs, offset forecast. reserves This was in by to

related the all we C&I quarter X charge-offs this Substantially loans. took to

very As the we've in in are past, nature. charge-offs said idiosyncratic C&I

of at this aren't time. emerging trends any seeing We concern systemic

reported in is XXXX composition a we've the given a As in before, rate think likely for XX that we was XXs year. commercial We the it somewhere portfolio. a to bit charge-off do normalized is said portfolio points commercial in basis higher we be expected bank the believe a towards in than compared the of to XXXX, shifts probably provision for more

to toward So that it continue level. X% will move likely

pushed I million because income pinpointing did quarter noninterest Noninterest XXXX, that terms won't guided expense, to and try the at apparently, going $X material to out costs you're very you ask quarter to me. of know out in The railcar of last expense. and which to quarter refurbishment good we not tell that. nothing I we're about into get or really that's income for call

income the for of lease ETR And lease XXXX, any to equipment, going would those residual operating quarter, about forward. and financing million be lines $X I excluding both about of to depreciation So income. XX% be both project per

comment the some do I We with a close impacted residential on areas. will in exposure have brief wildfires. L.A.

ZIP in in is underinsured. or obviously an either expect recent We the evolving is the don't we instances any fire where most $XX codes million this information find to indicates areas. not have very situation, exposure, While about of so uninsured identified still much property

over content. has expect material on And remarks or so any to to closing Raj provisioning for I'm that, have turn will any it today. loss he we don't this therefore, impact With going

Raj Singh

couple One, a talk I things I usually while the about giving down to guidance. Yes. just want talk wrote of I about. environment I forgot -- that

imagine, you constructive as just Street, So can more not It's more ours. a on industries, not environment Main on for Street. news. optimism just lot is of regulatory there a positive There's all Wall

So guidance There gave year going there the comparing or to this worried ago, a those were you. be that to some are positives. ago, recession. was probability of a was a A a I'm we we year about, slowdown recession.

think much is the least term. today, the whatever it's I lower. probability in At short

generally So the our with there's more optimism optimism economy. more in clients,

good And part. so that's the

the side the in and On relates terms to are of uncertainty is and more negative have, there's if impact of that policy, changes big especially changes might trade third especially as order and it in there sudden second policy.

all how that portfolio. will we're in impact risk So of our monitoring that and

into there competition And lending is Second, I after year A ago. off that we really, saw say side, year the Silicon eased the respective expect would a ago, today crisis. competition widening Valley than of them more a year. keep and months, in X to we 'XX. spreads spreads would tightening starting been summer of have And say the last tightening, I this for

competition spreads. in But something There's So we're and hopefully, of will administration. all keeping nothing. eye the to change amount there's more an that this more tighter And on. uncertainty with

seen quarter annualize I'd overall, BankUnited, that not. last the So all, One and I it say, any would anything. take don't at progress one take of still All comment. than first you've ever

in quarter any a at look thing annualize be don't it. Because XX-month take stand lumpy, and its always You own should can should be no episodic. the one and It business can on quarterly ratio trends.

obvious, to us a that the the go in all the how about hit and they if a say progress could Every better on of now. come of margin to is sell to Second, or not did our you've our loans and financial any going pain magically I'm I take us we talk just world -- out investment look or of some take kind banker can not make that. securities repositioning state engineering. the We seen any has and result would better earnings

that. we I But have, haven't haven't done any fine. We and some of done know that's that. banks

time. you is blocking sheet improvements and all the So just improving at good liability tackling and the old see X and a X asset balance

So for and that, with over will I'll turn stop, it questions. I

Operator

come first with [Operator going Woody from to of KBW. is question line Instructions] Lay Our the

Wood Lay

appreciate X% of at NII. all XX overall talk the components sort it look over I -- it I the I past you wanted above of think If it going just guidance. grew about optimism range. to it months, looks could in the like way to about the a Is is that But forward? come bit there in a good range? that Or little X% to

Leslie Lunak

digits. Last X%, was up to year, year and for we're high probably Woody, -- what Yes. it high mid- to is projecting you said, next mid- as single

Wood Lay

Yes.

deposits. Okay. potential are previous it environment are the lot you interesting Maybe environment growth. bit. different a little deposit up changing as a of shifting over guidance sort peers little to same And the thought Raj, the I was talking an year, comment but the loan for a about reiterated a of where we of in bit

challenges gathering? plan any those how deposit to present counter challenges? that of And does to you sort So related do

Raj Singh

we're I demand see opening. worried demand I'm -- how see accounts about Because not So we and is mandates many deposit not deposit growth growth, the pipelines, right? have I

feel our pretty rears lot be certainly that deposits. decent there lot deposit in go doesn't hard I of competition first more beyond couple to looking So interest-bearing going guidance. months. But into the X months X Pipeline a generally quarters, look to that good, that. it's growth, even of a right? on It's where up in about I first the we is pretty do If of beyond feel land,

year. it is And in later will right harder not harder the little the what's that price We're of predict up. happen of now, as what to So but be to that's a it predict. heats exactly seeing if could demand

you down deposits. success in than so fact, of what In terms far, we've bringing see, last the cost the more have of as can had we quarter, thought interest-bearing

business. deposit So back is. itself. is spreads. The A year competition spread side really the banks is tighter much We're I nonrelationship nonrelationship talking ground was as business. doing seeing We're that tightening reality not competition of lending was nobody the as seeing to the revealing the is on kind going ago, is doing the concerning about where

you get a didn't couldn't have deposits, loan. If you

to We're case. who to Now, way on we gets more 'XX, the line would from with I'm we sort the people trying deposits. the in That's the it only not were that, seeing the to that's love deposits, way of but business on lending back where -- harder That's banks do away behaving. side hold every where competition back our the discipline. see as time. are have things have It's make we'll exceptions month all competition that 'XX, walk but on than still

Leslie Lunak

add also overall low single projecting loans and that, Woody, digits mid-single up up to your digits. total question, would that we're deposits I

Some funding of still the loan deposit as continue going growth. production as well the to from of noncore to portfolios resi come from of commercial the and runoff is new

Wood Lay

Right. And base just last that's then great Yes, asset the sort looking of for at me, color. expectations.

done You've of a keeps Or bunch flat the Do think the there's more of you see here? you ahead? paying sort think wholesale to grow the to from do begin a down base year great could funding. base which go, we job asset over

Raj Singh

of be some can we not paid down pay a There'll lot. lot, I much down that, don't that bit think -- wholesale I a a little borrowings, of going trimming while forward. think but we

up down So overall, like growth. projecting little will than probably by a a single-digit little be amount. will being sheet high not meaningful bit last flat, a bit. as case we're was be rather But It not up balance the It's the or year.

to paydown end. be is So coming it Yes. an -- will FHLB story

Operator

with from going Our question line Instructions] Ben come Gerlinger is next the to Citi. [Operator of

Benjamin Gerlinger

Leslie, when kind years Is you the know over made guys have other you big your is to bigger if correctly, do picture, you think the a and ones How just XXX was stand tailwinds, looking quarters recall momentum I in of has know So to next I of longer-term couple -- see over mix. guys goal you like the just kind couple the initiatives of the of of a days? XX% title that here? I know it. next the I a deposit. what's There's there that but for to soapbox component past the any grown. on. lot you here's wanted highlight, noninterest-bearing seasonality have that

Raj Singh

to get Which Well, very shooting we're to lot but for I be this we're do But to hopefully, can't of beyond at XX% to will XX% answer, we get to right growth, this that. little happy we this little if a When mid-XXs, pushing bit a I total more a we're of year, sort get now, And and pinpoint is XX%. long-term year. that. it's deposits. year. medium-term, DDA above

Benjamin Gerlinger

helpful. margin know of you then I That's kind be Leslie, just down. X said cleanup Okay. just could questions. And

specific... said I points think in Or the you are down basis X highlighting just XQ? you

Leslie Lunak

on less what clarify much than I would will to focused yes, the challenged to -- be didn't to that more XXXX, second points say being of that take said a the but third really expansion. be for be points versus but quarter, points. you be over the the whole X I'm the I XQ in on are what unfortunately roll-off I'm the would that. -- margin which versus X lot there XQ. down basis be X trend would quarter the pressure down more first because would happens X should focused of the from you, over place quarter in in that course year, translate margin let Yes, expansion basis me basis X happens doesn't hedges, -- in margin of probably again, And

Benjamin Gerlinger

sense. like it just Yes, hurdle thought a I XQ, but for it's makes I you. said, yes. was -- higher Got

Leslie Lunak

That's correct. correct. Yes,

Benjamin Gerlinger

but of and to And that said is that? railcar, expenses going mid-single then pinpoint not you to inclusive you're -- try

Leslie Lunak

Yes. basis what Expenses, on digits is railcar year-over-year up GAAP mid-single costs, I as reported, including the guided. a

Operator

next Instructions] to Wells line of from Braziler come is [Operator going with question Fargo. the Timur Our

Timur Braziler

does ratios just change? over the wondering timing with X%, Raj, of of NIB, you kind to still profitability you last a XX% going taking much the magnitude about get Or thinking those of talked that XQ to we it's on or and to over I'm take the quarter, over XX% equity, hurdles? to those better get XX%. laid ROA there. just next out return had of you part year result, are 'XX

Raj Singh

get of go say Our way, we're to don't we exactly X.X% I that to look beyond by we're marching we direction. direction. in exactly moving We but past it get very like dicey a business little that I tell X%, try XX%, still there, when progress see the couple model get can't I points at and surprised I to ROE, close pretty to we higher. to this want there. in not year last hard like say. very with past X% -- past don't said quarter, guidance, made double happy direction This damn moving and It's when digits, XX%, And I've was like I'm ROA. certainly XX should so said we're times But XX%, But But work be It's a we stop in hard provide that there. X basis when us, in which we XX% it's the say becomes we because the we've get exactly ROE. XX done. already, will to would guidance. past which want low to get to that to even the months. But you you speed

Timur Braziler

then And it. the [indiscernible] was new or seasonality the at in there. appreciate fourth quarter momentum soft just what a frame Got production? quantify But a I DDA kind quarter? looking specifically, typical is the maybe to on way that or backfilled seasonally the what transition Can by successful was color of you XQ all there

Leslie Lunak

that Yes. No, we're not to going to specific. try get

Raj Singh

is title exactly we talked is up, Yes. gap. as was was it what Yes. in else have down and we mean, filled down, But that the which I predicted. everything about

happy. so long. a very we've it becomes very done because predictable of title And for we're sort So business now

look everybody I'm with who that accurately helped pitched ups So and can else happy and gap. at very the downs. in fill we

Leslie Lunak

by that granular line. results going We really sorry. of Not of disclose a to, don't level business

Timur Braziler

forward balances environment? anything to with And and the were a there of dynamics more the Can pulled it. Is essentially quarter at quarter-on-quarter. as surprised of at loan and slower Leslie, side beginning opposite XQ Got on the being had guess year, stronger that last C&I me. those deposits year. mentioned flat just the the end you happened on of gets you first the seasonality just I'm in little I of maybe into the then for broadly XQ? kind is talk the the what through of talk side,

Raj Singh

are you very, was Yes, difficult that very saw because flatness to payoffs predict. entirely that of

Leslie Lunak

predict year, unfortunately. is the and of production, timing which predict is quarter in things, those then sorts I first of payoffs Yes. exits and All the the the I lighter back but normally can and ramps of half up towards can't

Thomas Cornish

company there payoffs company sales. is lead mean, You And piece that of things in extremely mentioned big competitive hard to I of a to also Raj have was sales the like That mixture predict. a market. it.

of virtually We there, board, playing they dollars the nontraditional that debt funds business every in and increasingly are out in trillions of more are lending. are a funds. I of line formula-based across seeing competition debt there's lending role mean, and from

They're those also will to So or where it we structure that's of come episodic competitive -- hard financing predict. and more something kind things -- there's the focus go. bank-like to near around because acquisition hard again, rates. We a tends financing table predict predominantly like that be on to at

is levels the even as In of there's looks we be new want overall the there period And long we production that to over quarters, a at as is that our very some more. good, quarters, will out. it know and pipeline But less. time, some

Operator

Group. next from to of Our line question the David Bishop going Instructions] [Operator come is with Hovde

David Bishop

the purely the for those segments? the anything related portfolio. credit unrealized securities increase Curious, you, question Leslie, on rate-driven, some in maybe on Is a that of loss

Leslie Lunak

spreads No, a a to extent not more It's by rate anything. mark and really mark. nothing than some mark, rate It's credit spreads, driven but a related. credit it's

David Bishop

the yields, the you And rate did loan see of decline portfolio. it. noted Got then floating in nature the

where curious loan just trend here term? near the the or see sort the pausing Given Fed in over is you if yields of dialing maybe back,

Leslie Lunak

the they stabilize. should go and Fed business is doesn't again, maturing cut if higher off. new things on coming paying they rate up a should mean than at Actually, because are I that

So if see should the actually Fed doesn't them inflect. we move again,

David Bishop

what coming days? of is new these sense on Any production

Leslie Lunak

[ So a fourth the in would yes, over getting a Hang on, I have X.X so somewhere. X.X averaged [ quarter. little for over ], the quarter, on commercial fourth between production those little -- say ] that. numbers I

David Bishop

finally, Raj. then question, And holistic maybe Great. a

play noted You of that administration, if on or maybe the segments out. Any that knows maybe how the commercial impact are to quantify in the tariff way situation loan feel ring-fence portfolios change who the or could tariffs you could impacted will side?

Raj Singh

impacts, not it's predict. hard very, and very second It Not are direct can obvious difficult too order very soon the third be which just because impact. and to

Leslie Lunak

Just way think. too I soon,

Raj Singh

Yes.

Operator

to is from next Our the going Sandler. come of question line with Stephen Piper Instructions] Scouten [Operator

Stephen Scouten

mid- the kind expansion flat. will around, to peak NII above back half the back It X% potential I Leslie, just high balance commentary follow your And could NIM like the year. around of single-digit wanted relatively on you the said I year. be the think sheet to sounds then in maybe of for the

that expansion, So loan growth? convey in to upside balance most of from growth is fair it or from not is coming that especially sheet math NIM that the

Leslie Lunak

reflecting. is Yes, the that's Yes. which I fair. margin think And what is transformation, mix probably

I think that's fair.

Stephen Scouten

Got it. Perfect.

title that Just -- whether to kind full of of component wanted gives picture kind year. ECR to might you clarify. what remind the be what's And that, with growth, around that on then on or expense around it's going of inflows? particularly the noninterest-bearing related Can maybe us those deposit the otherwise,

Leslie Lunak

We that. at a line and that haven't level, not that results specific probably do going business disclosed of we're to

Stephen Scouten

then out, thing Okay. maybe that enough. at loan you And apologies And maybe it last or just $XX.X for it the me. think office you I but called I all, missed Fair least the... was guys that said at one was if million

Leslie Lunak

$XX million. is one The

Stephen Scouten

any the be any that might around can of that Is specific allocated color additional Okay. LTVs on there that loan specific already you or or any give there? color additional reserves there

Leslie Lunak

credit. we're we try to feel not Other about one specific get we say like to too reserved, than details many into adequately

line so... there, a You're fine walking kind of

Raj Singh

on it. Well, we are a reserve -- specific we have

Leslie Lunak

Yes.

Stephen Scouten

is chance, on? can something that be by that commented market And Okay.

Raj Singh

It's in the north, City. but it's York not New

Operator

Arfstrom to question from Our come of line next Jon is Capital Instructions] Markets. going with the RBC [Operator

Jon Arfstrom

get to Leslie, question Do for area you line that you for would like X% the When a have you. reserve level. time to on that?

Leslie Lunak

like on get I'd there. me portfolio to was when I'd to much say XXXX. It's tomorrow, asked likely there to there when you thought get to on we're on not it's going we're get you get when like I And that's stay our Jon, of on think I Oh, there. to the projected would the end I ROA. the say But remix. by going to predicated reserve, so reserve, were likely I

So commercial get if -- we'll projecting there production we're than more we have loan faster.

have little We there a we'll less, slower. get

Raj Singh

And economy dependent on what move it's the that's... and also --

Leslie Lunak

remains and doesn't supportive. economy stable if are that. Yes. Yes. assuming that about bets That's all Obviously, off the happen,

Jon Arfstrom

Yes.

maybe for losses? then, of we And expect sense. you, Okay. aberration? kind Would of you on have know you quarter on you an thoughts losses? question, we Or of do consider should of I a Makes kind you flow consistent said this, harder that? a any kind expect but lot Tom, reserve should of what this a for but

Raj Singh

me Tom can take and Let that fill in. one,

decent level. charge-offs our a the Net year, XX commercial it, is was XX at points. came charge for basis what a pretty points For basis -- off bank

low too would on sustainable I basis. a they are fact, say In probably little a

making you to X consumer about, is can when this lot. any at thing my is at and I place comment the have in then number it don't probably banks, it. quarter, and one commercial only over banks, annualize with It's because to any is basis comes our loans go This can could most X one quarter one Because if probably issue our X quarter that the back XX true and charge-offs. take that X another The basis points points. at you or points unlike -- look you any in losses losses have all a a swing basis one was

look picture. it's to like XX-month something So to get I trailing or think truly full really a a that at important

this could basically losses be it the lot not quarter, X, it a next could X, X. it X loans. it's loans. It's we be quarter, be And of know I could took

from dangerous. and can extrapolating losses. some have that X will be measuring You But any quarter

at most trailing look on ratio. quarters not X particular that say I focusing X should especially time, I'd But for at any any So you for do and ratios, that quarter. given think

Leslie Lunak

are commercial a Losses very portfolio in idiosyncratic.

Jon Arfstrom

challenging. Do have list? not question, but Raj, helps. you. that that Maybe for framework just would I less then, know question an maybe any helpful wish a it's you And be easy changes or regulatory

Raj Singh

out actually I will to from my with. peers that begin had in stand probably complaints saying I no really

on for the years, really see We get through most part, nothing when concerned up bank. several saw crisis, regulators, a may didn't complain even sins the about you last I you end after for We crisis, think there's that. not have don't that is to up time, do a the for It's good for the M&A of get system. good we for that communities would something serve. banks We're I any much complaint held M&A is these of long the that which paying most I have lot watching side. know transactions I a not -- for another the a of pretty if is

more going So forward. we'll I see think M&A

us but impact for pick create some but not us means participate indirectly. organically up it this, lot opportunity will It in it will will a doesn't -- we business. us it More M&A create to that impacts of directly, Again, disruption.

on So big really kind the the regulatory happening perspective indirectly, good other on is than I a this us. a of our will thing front. can't front. some it regulatory But celebrate for on say be really moment that, Nothing to that

For years, few it's fine. been the last

Operator

Our is line the Instructions] going from [Operator Shaw last question to of Jared with come Barclays.

Unknown Analyst

Jon [ Jared. is ] for on This

terms in loan composition commercial of the and the on just noncore remix quick real Just big loan is remixing, how portfolio dollars?

Leslie Lunak

a out can see release clearly. breaks that you pretty that I table mean, in that the there's press

release, core mean, warehouse million down. equipment That So grow, should call and we're the at trying million. but not won't finance. noncore, run on now down. We I is And press then to mortgage in million $XXX not in $XXX $XXX franchise or right finance, that municipal X run that of Page

those press out the in page -- the So detail numbers of but on all are second laid release.

Unknown Analyst

of on little forward? possibility. capital just there. buybacks were a any then as is Okay. about priorities quarter Great. I capital I And use think a talked up last getting levels, going CETX bit guess, on

for you Just would capital -- that? guys? manage a level what's How good you

Raj Singh

smack CETX of is I far -- benchmark excess there's that to groups, I'd From our not we ratio middle. kind capital. -- peer a in into we're in our perspective, say, like think capital ourselves of It's what say we're now We terms XX%. curve the

all. could it's the move it for much but not to I a argue at going very small You buyback, will a don't big think one. needle be

continue The at is We there. to every February, but it about be Board over much in there'll will I meeting Board meeting. next movement think talk don't

see mind be And is about some bank. to of how very I going the will on the impact to that all will stuff the much still change uncertainty talked our

we've the for had So being. There I put is stay a increases. cadence that we'll dividend time with think

do. cadence speak and really be So February. happening that couple the but than I meeting that, the But that years happens, don't what last predict want at before at in that will on not the from also of look other to you capital looked will much side. over we could

Leslie Lunak

Agreed.

Unknown Analyst

That's clear. Okay.

Raj Singh

way, and other want On right, what us for tweak to actually stuff. fact of that it and room getting a we to proposed. or to I was and SEC I CRA, on do our question us, and regulatory it, the that creates all things for goes lot a go need on is what how there's not will previous impact think just rules about see space work one away deposits, stuff question back one mind for do those broker have positive By tweak ready uncertainty to about stuff. business that question, was the lot taking of some -- I the The that positive climate

positive. a definitely is that So

e-mail it to doing, about that a I've effort talking from big positive certainly doing. have if the of from have is in us these lot are had that that a not somebody taken and yesterday fruition. And would that and but pipeline Not FDIC the time could all not about come things is stuff the of seen list an for doing. been

So -- certainly about. that, happy we're I'm

Thomas Cornish

add to that's us. regulatory also to all It's environment would entire beneficial clients, I beneficial the a of more our for business-oriented industry.

Operator

like Singh closing to conference the for I And Thank hand any would you. back now to Raj remarks.

Raj Singh

continue for to on to this know but this. with Leslie story. listening how you And you to to And a interest or myself. A we'll is have similar Bye. you this to a thank I for thank And us. you you. come -- questions, if deliver in a joining said, year detailed Now trend, hopefully, we reach year. strong back Thank taking now, you from Like strong much can finish very us. any

Operator

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

disconnect. You now may

BankUnited (BKU) 22 Jan 252024 Q4 Earnings call transcript