BankUnited(US:BKU)2026-01-21 15:02Financial 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 [8][11] - Net interest margin (NIM) expanded to 3.06%, up from 3% in the previous quarter and 22 basis points year-over-year [7][26] - Total deposits increased by $735 million during the quarter and $1.5 billion for the year [19] 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 [20][22] - Non-interest income increased by $30 million quarter-over-quarter and year-over-year, despite a decline in leasing income [28][29] - The company experienced a decline in non-performing loans (NPLs) and criticized classified loans, indicating improved credit quality [11][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 [10] - The loan-to-deposit ratio finished the quarter at 82.7% [20] - The weighted average loan-to-value (LTV) ratio for the CRE portfolio was 55%, with a debt service coverage ratio of 1.82, indicating strong metrics [22] Company Strategy and Development Direction - The company aims to achieve double-digit growth in net interest-earning assets (NIDDA) and maintain a target CET1 ratio in the mid-11s [12][13] - The strategic focus includes expanding in new markets such as Atlanta, Texas, and North Carolina while maintaining a balanced approach to commercial real estate [75][78] - The company plans to continue share buybacks and increase dividends, reflecting confidence in its financial position [12][13] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the economy, noting that it remains strong despite geopolitical risks [33][34] - The company anticipates continued growth in NIDDA and deposits, with guidance for loan growth in the 2%-3% range and core loan growth around 6% [15][16] - The management acknowledged potential challenges from tightening spreads and the impact of Fed rate cuts on margins [17][34] Other Important Information - The company authorized an additional $200 million share buyback, complementing the remaining $50 million from a previous authorization [12][13] - Non-interest expenses increased by $6.6 million from the prior quarter, primarily due to a software charge and employee compensation [30] Q&A Session Summary Question: What drove the non-interest-bearing deposit growth in Q4? - Management reported that all business lines contributed to deposit growth, with no outliers, and emphasized the importance of average NIDDA over period-end figures [40][41] Question: What are the beta assumptions for loans and deposits? - The company expects an 80% beta for deposits, with a mix of floating and fixed-rate loans impacting the overall beta [44][45] Question: How does the company plan to balance buybacks with capital levels? - Management indicated a flexible approach to buybacks, taking advantage of market volatility while aiming to maintain capital ratios in line with peers [49][50] Question: What is the outlook for commercial real estate (CRE) growth? - The company has room to grow in CRE, focusing on asset classes other than office and hospitality, and expects mid-single-digit growth in 2026 [62][64] Question: Can you provide details on the fraud incident mentioned? - The fraud involved a contractor in New York, resulting in a complete write-off of a $10 million loan due to lack of collateral [67]