BankUnited(US:BKU)2026-01-21 15:00Financial Data and Key Metrics Changes - The company reported earnings of $69.3 million, or $0.90 per share, for the fourth quarter, with an adjusted EPS of $0.94 after accounting for one-time software write-downs [7][25] - The annualized return on assets (ROA) was 78 basis points, adjusted for the software write-down, it was approximately 81 basis points [9] - Net interest margin (NIM) expanded to 3.06%, up from 3% in the previous quarter and 22 basis points year-over-year [8][26] - Total deposits increased by $735 million during the quarter and $1.5 billion for the year [20] Business Line Data and Key Metrics Changes - Core loans grew by $769 million in the fourth quarter, with commercial real estate (CRE) loans up by $276 million and commercial and industrial (C&I) loans up by $474 million [21] - Non-interest income increased by $30 million quarter-over-quarter and year-over-year, despite a decline in leasing income [28] - The company experienced a decline in criticized and classified loans, with non-performing loans (NPLs) down slightly [12][28] Market Data and Key Metrics Changes - The company noted that the cost of deposits decreased by 21 basis points to 2.10% at year-end, down from 2.31% at the end of September [11] - The loan-to-deposit ratio finished the quarter at 82.7% [21] - The commercial real estate portfolio grew by 9%, with a total exposure of $6.8 billion, representing 28% of total loans [23] Company Strategy and Development Direction - The company aims to maintain a balanced growth strategy, focusing on core loan growth of about 6% while managing residential and other loans to shrink by about 8% [18] - The board authorized an additional $200 million share buyback, indicating a commitment to returning capital to shareholders while maintaining a target capital ratio in line with peers [13][14] - The company plans to continue investing in existing markets, particularly in Atlanta, Texas, and North Carolina, while expanding its footprint in Tampa [49] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the economic environment, noting that despite geopolitical risks, the economy is performing well [31][32] - The company anticipates two Fed rate cuts in the upcoming year, with a hedged balance sheet to mitigate risks associated with interest rate fluctuations [32] - The guidance for the next year remains consistent with previous expectations, with a focus on maintaining growth in deposits and net interest income [18][30] Other Important Information - The company reported a tangible book value per share of $40.14, reflecting a 10% year-over-year growth [13] - Non-interest expenses increased by $6.6 million from the prior quarter, primarily due to a capitalized software charge and employee compensation expenses [29] Q&A Session Summary Question: What drove the fourth quarter non-interest-bearing deposit growth? - Management noted that every business line contributed to deposit growth, with small business, middle market, and corporate sectors performing well, while the title business saw a seasonal decline [34] Question: Can you walk through the loan and deposit beta assumptions? - The company expects to maintain an 80% beta for deposits, similar to past performance, with floating rate loans being a significant portion of their portfolio [36][41] Question: How do you balance buybacks with capital levels? - Management indicated a flexible approach to buybacks, taking advantage of market volatility while ensuring capital levels remain aligned with peer ratios [39] Question: What is the outlook for commercial real estate growth? - The company plans to grow CRE mid-single digits while maintaining a balanced portfolio across various asset classes [44] Question: Can you provide insights on the recent fraud incident? - A $10 million loan was written off due to fraud, with management indicating that such incidents are hard to predict but overall credit quality remains stable [12][50]