BankUnited (NYSE:BKU) reported first-quarter financial results on Wednesday. The transcript from the company’s first-quarter earnings call has been provided below.
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The full earnings call is available at https://edge.media-server.com/mmc/p/mmozynmf/
Summary
BankUnited reported first-quarter earnings of $62 million with an EPS of $0.83, an improvement from last year’s $58 million and $0.78 EPS.
The company highlighted the seasonality of its business, noting that deposits and loan production typically decrease in the first quarter but rebound in the second.
Non-broker deposits grew by $277 million this quarter, and over the last 12 months, non-broker deposits increased by $1.4 billion.
The company made significant progress in credit, with non-performing loans down by 26% and criticized and classified loans down by 12%.
Despite geopolitical uncertainties, BankUnited maintained its full-year guidance and is optimistic about achieving its goals, emphasizing strong NIDDA growth as a key driver.
The company’s strategic focus includes being a top-tier performer in NIDDA growth, enhancing payment processing capabilities, and managing deposit costs effectively.
Operational highlights include a share buyback of 1.3 million shares, with $200 million still available for future buybacks.
Management expressed confidence in continuing to reduce NPAs and emphasized the importance of new client acquisitions for future growth.
Full Transcript
OPERATOR
We know for next time. Good day and welcome to the Bank United Inc. S First Quarter 2026 Results Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today’s presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touchtone phone. To ajar your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Jackie Bravo, Corporate Secretary. Please go ahead. Thank you, Chloe. Good morning and thank you everyone for joining us today for BankUnited Inc. S first quarter 2026 results conference call. On the call this morning are Raj Singh, Chairman, President and CEO; Jim Mackey, Chief Financial Officer; and Tom Cornish, Chief Operating Officer. Before we begin, please note that our remarks today may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements reflect current expectations and are subject to various risks and uncertainties that could cause actual results to differ materially. The Company does not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. Additional information regarding these risks can be found in the Company’s annual report on Form 10-K for the year ended December 31, 2025 and any subsequent quarterly report on Form 10-Q or current report on Form 8-K which are available at the SEC’s website. With that, I’d like to turn the call over to Mr. Raj Singh.
Raj Singh (Chairman, President and CEO)
Thank you Jackie. Thanks everyone for joining us. I know this is a very busy morning. A lot of banks have these calls going on. So if you joined our call, we appreciate it very much. I know it’s not an easy choice, but before we get into the numbers, I want to take a minute of your time and do my public service announcement which I usually do towards the end of the call, but I’m going to start this time with that. And you heard this announcement from me before at previous earnings releases, at meetings I’ve had with investors, in conferences we’ve done. We’ve been talking about this for some time, but I think it bears repeating. So our business is a fairly seasonal business and that seasonality is well understood by us and has been demonstrated now over several cycles, several year cycles and I’ll talk about that in a little bit. You know, just as a refresher of what that seasonality is. Deposits and loans, I’ll talk about them separately because they behave separately. Our deposit balances, especially NIDDA, they start declining sometime in mid to late December and they bottom out deep in the first quarter. They start to rebound back late in first quarter, towards the end of the first quarter and then they go straight up in second quarter. Usually second quarter is our strongest growth NIDDA growth quarter. They stabilize in third quarter and then in fourth quarter, the cycle again begins with declines in December. Now, we’ve observed this for many, many years. Loan production and again production, not balances Loan production, especially CNI Loan production starts slow in the first quarter. That’s our slowest quarter. It picks up steam in Q2 and Q3 and Q4 tends to be our biggest production quarter. We saw that last year, the year before and we expect to have the same happen this year. There is some seasonality in expenses, but I think that’s not just to us, that’s. Everyone has that with FICA and stuff that happens in the first quarter. So I won’t get into those details. Now. When this happens, especially this big swings in NIDDA, it impacts our margin, it impacts our margin, margin impacts our revenue, that impacts our bottom line. EPS and ROA. So what happens when you look from Q4 to Q1, you see pretty meaningful drop in earnings in ROA and EPS and so on. But then if you look to Q2, it kind of rebounds all the way back, if not generally more than all the way back. So in fact, yesterday as I was writing down my notes on what I’m going to say on this call, I do this the day before. I sit down with a yellow pad and I hand write what I’m going to say. I had this deja vu moment. I think I’ve done this before. I went back and I looked at my notes. Surprisingly, I actually still held onto my notes from my call a year ago. And it wasn’t a deja vu moment, it was that I’ve been there before. This is exactly what happened a year ago. So I just quickly jotted down what happened Q4 last year to first quarter of last year, Q4, 24 going into 25. What happened to earnings, EPS, ROA and all that stuff. And I compared it to what happened this year. Our earnings quarter over quarter declined by 11 million this time last year. This year they’ve declined 10. EPS declined 13 basis points, this year it was 11. ROA declined 10 basis points last year, this year it was 9. Slightly better, but kind of in the same ballpark. That’s just the seasonality of the business. So the moral of the story is don’t look at quarter over quarter, look at year over year or trailing 12 months. I know it’s a fast changing world and we all believe in the here and now. But if you just look at the very short term it will throw you off both in quarters in which seasonality works against us and in quarters in which seasonality works for us which will be the next quarter. So with that PSA out of the way, let me get into the numbers. So earnings for the first quarter came in at $62 million. EPS was $0.83. And I’ll compare this to first quarter of last year. Like I just said, last year earnings were 58 million and EPS was 78 cents. Excuse me, NIM was at 299 last year this time NIM was 281. Pre-Provision Net Revenue (PPNR) was 106 million. Last year Pre-Provision Net Revenue (PPNR) at this time was 95.2 million about 11.5% growth despite seasonal pressure on NIDDA. Like I just mentioned in the quarter deposits did grow. Non broker deposits grew 277 million. We used most of them to pay down brokered so net growth was about 7 million. But again like I mentioned should be looking at annual numbers or trading 12 months numbers. So over the last 12 months non broker deposits grew by $1.4 billion. NIDDA grew by $875 million. I would actually even go further and say period end balances don’t mean as much as average balances do. And average NIDDA grew by more than a billion. I think it was 1:50. I’m looking at Jim to confirm but I think it was a billion 50. Talking of loans, loans over the last year grew by 906 million. This quarter grew only 9 million. Non core loans continue to shrink pretty consistently. That’s been now going on for several quarters. So nothing new over there. Let’s switch to credit. So we made a lot of progress on credit this quarter. NPLs were down 98 million. That’s 26% and criticized and classifieds were down 146 million or 12%. Now that 26 and 12% is just the progress we made in the last three months. That’s not an annualized number. Our coverage ratio of ACL to NPLs improved from 59 to 76%. Switching to provision. With respect to provision we continue to be cautious. The geopolitical landscape has changed in the three months since we last spoke to you and and we did use $8 million in qualitative factors in our provisioning to kind of account for that uncertainty. Tom can talk more about this, but I don’t think we’ve seen any meaningful change from what our customers are telling us in terms of their plans and their capital investments and so on. But I will also say that they are very keenly aware of the situation in the Middle east and are watching it like, you know, as they should. Smart money seems to be betting that, you know, the conflict in the Middle east will wrap up in a matter of days or weeks and not months. But only time will tell how that will play out. So like I said, I’ll go back and say we did use some qualitative factors to the tune of $8 million for that uncertainty. Switching to other aspects of the P and L Nim, like I said, came down to 2.99%. And that number was within sort of the ranges of outcomes that we were expecting when we modeled this and our numbers back in December. All the other numbers are not that notable for me to get into. I’ll leave some of the stuff for Tom and Jim to talk about. Oh, yeah, we did buy back a million three shares as we had promised. So we’re off to a good start on the buyback and we still have just here, under 200 million in dry powder left. And we’ll continue to use that. Lastly, guidance. No change to guidance. So what we gave you stays. That’s a full year guidance that we gave you. And we’re still feeling pretty good about those numbers. I think. Not much has changed actually, since we gave you guidance in our business or in the economy, I guess. In the economy, you could say the conflict in the Middle east is sort of the only new factor. But it looks like it’s moving towards some kind of resolution in the short term. So with that, I will turn it over to Tom.
Tom Cornish (Chief Operating Officer)
Great. Thanks, Raj. Yep. So I have a little bit of my own public service announcement today as well. It’s a day of PSA to follow with Raj. I want to talk about deposits first and sort of deposit strategy before I dig into some of the numbers, some of which Roger’s already covered. I wanted to back up a little bit and just talk about sort of what are we trying to do with the overall deposit and client book and, you know, over a longer period of time and how has that performed. So when I look at it, I would say we have three major goals. One is to be a top tier performer in Nidda growth. And our Nidda, as you know, is largely commercial Nidda. So when I look at that number as Raj said we’re up period to period from first quarter last year, 875 million or 11%, which is a pretty impressive number. On an average basis, we’re up the billion 50 million that Raj mentioned. So, you know, strategy kind of number one of being a high level NIDDA growth organization and that being a central part of our business focus, I think has been well accomplished. The second major emphasis is being a payment processor and transactional bank for our clients and making sure that we maintain good pricing discipline around all the products and services that we sell that flow through commercial NIDDA and making sure that we are effectively cross selling as many products as we can into the client base. So I kind of measure that by, you know, is our service charges on deposit growth greater than our NIDDA growth? And when it is, to me that seems to be a multiplier effect on that. So if we look at service charges on deposits year over year, first quarter to first quarter, we’re up 18.8% versus an 11% deposit growth. So to me, that means we’re executing on the strategy of ensuring that that book is well sold, well priced, and, you know, client relationships are becoming very sticky. The last part, which is really the hardest work, is managing deposit cost. And you’ll see we had a decline in average deposit cost for the quarter. And I’ll go through those numbers. But, you know, the process of managing deposit cost, especially in a period of time where we’re not forecasting a fed funds rate decrease that we can lean into is hard work. And you know, and we are consistently doing that. We just. Roger and I were talking now we have a series of rate cuts that are going in this week on the deposit book. So we are consistently analyzing the deposit book and looking to make it more cost effective. So when I think kind of about those are the big three strategies that we try to execute around when we think about the client book and the deposit book as a whole. So with that a little bit more detail, as Raj mentioned, non broker deposits were up by 277 million from the previous quarter than 1.4 billion from a year ago. NIDDA represents 30% of total deposits. Our average cost of Deposits declined by 6 basis points from the previous quarter from 218 to 212. Wholesale funding declined by 70 million from the previous quarter and 749 million from the previous year. And as I said, service charge revenue is up 18.8% for the quarter. As we look into the second quarter, which is on the deposit side, traditionally our best quarter, you know, we have a high level of conviction around very strong deposit growth and NIDDA growth in the quarter. It’s our best quarter typically and you know, all indications from pipeline and activity and business that’s in closing documentation is that it will be a very strong quarter on the loan side. As Raj noted, it was fairly typical first quarter for us. Cree and mortgage warehouse lending were up 76 million and 77 million respectively. CNI declined by 144 million from the previous quarter. Part of that is declining off of higher utilization rates that we tend to see at the end of the quarter. First quarter, particularly in our larger corporate business tends to always be a bit softer because of the financial statements timing for new business that comes through. RESI continued to decline as part of our emphasis to focus on the commercial lending business. And so I think it was about what we expected to see for the quarter. Few comments on CREE that I typically make. The CREE portfolio is now just under 30% of the overall book. And within the CREE book, if you look at page nine in the detailed analysis, you’ll continue to see that it’s a well balanced portfolio across all asset classes. Virtually all asset classes are somewhere between 20 and 25%. And so maintaining a good quality balance in the CREE book is important. You’ll note that the total weighted average debt service coverage for all property types is 1.84 and the average loan to value is 55.4%. So portfolio continues to perform well. This is probably the last quarter. I’ll actually point this out, but you know, we continue to see improvements in the office book. You’ll note the office book on page nine. The weighted average debt service coverage ratio is now up to 1.78. It’s typically been running in the 1.54, 1.55 range. And you know, what we’re seeing is continued improvements in leasing. We’ve seen a reduction in the office book, which the traditional office book is now only about 16% of the book and about 4% is medical office building. And we’re also each quarter starting to see this narrowing that we’ve talked about in the past, which is the gap between physical occupancy and economic occupancy. As lease rate abatements start to run off, we see a closing of that. So we saw a pretty significant increase in the weighted average debt service coverage over the last few quarters. And you know, 1.78, it’s a pretty strong performing portfolio right now. So that’s my coverage on cre and I think with that I’ll turn it over to Jim.
Jim Mackey (Chief Financial Officer)
Great. Thanks Tom. You know, as Raj walked through, you know, it’s worth mentioning again, our first quarter is our seasonally light quarter for most of our businesses. So therefore comparisons to the fourth quarter are always difficult to make. And I don’t want to repeat a bunch of the numbers that Raj took you through, but I do want to hit just a couple other highlights. So if I just focus on the full year trends, you definitely see steady improvement in most of our key performance indicators that we look at. Net income was up 5%, PPNR was up 10%, ROA was up 6%, EPS was up 6% and NIM was up at 18 basis points. So the trends year over year are really good and definitely in line with the guidance that we gave you at last quarter. So we put in the press release. Just for full transparency, we do want to call out a couple …
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