BankUnited, Inc.

Ladies and gentlemen, thank you for standing by, and welcome to the Bank United, Inc., fourth quarter and fiscal year 2020 earnings conference call. At this time, all participant lines are in a listen-only mode. After the speaker presentation, there will be a question-answer session. To ask a question during the session, you need to press star 1 on your telephone. Please be advised that today's conference has been recorded, and if you require any further assistance, please press star 0. I'd like to hand the conference to your speaker today, Susan Greenfield, Corporate Secretary. Please go ahead, ma'am.

Thank you, Victor. Good morning, and thank you for joining us today on our fourth quarter and fiscal year 2020 results conference call. On the call this morning are Raj Singh, our Chairman, President, and CEO, Leslie Lunak, our Chief Financial Officer, and Tom Cornish, our Chief Operating Officer. Before we start, I'd like to remind everyone that this call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that reflects the company's current views with respect to, among other things, future events and financial performance. Any forward-looking statements made during this call are based on the historical performance of the company and its subsidiaries or on the company's current plans, estimates, and expectations. The inclusion of this forward-looking information should not be regarded as a representation by the company that the future plans, estimates, or expectations contemplated by the company will be achieved. Such forward-looking statements are subject to various risks and uncertainties and assumptions, including, without limitation, those relating to the company's operations, financial results, financial condition, business prospects, growth strategy, and liquidity, including as impacted by the COVID-19 pandemic. 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. A number of important factors could cause actual results to differ materially from those indicated by the forward-looking statements. Information on these factors can be found in the company's annual report on Form 10-K for the year ended December 31, 2019, and any subsequent quarterly report on Form 10-Q or current report on Form 8-K, which are available at the SEC's website, www.sec.gov. With that, I'd like to turn the call over to Raj.

Thank you, Susan. Welcome, everyone, to our earnings call. Thanks for joining us. I'll start by talking a little bit about the environment, the economy, then we'll get into our numbers. You know, since we last talked to you three months ago, really three big things have happened in terms of reducing uncertainty. And reduced uncertainty is a good thing, always a good thing. So the first and foremost and probably the biggest news of last year was the vaccine, which came out in November and is now being, you know, administered. Obviously, we had the election uncertainty last time. We're past that now. We also had the stimulus, which, you know, compared to the other two news is small news, but nevertheless positive news. We weren't expecting a stimulus to get done until the new administration takes over, but I'm glad it was passed a few days, a few weeks ago. So with that, as I look through 2021, it feels like a year with a very, very strong potential in the second half of the year, possibly starting as early as second quarter. But I do see a slow first quarter as all this good news is great, but it actually has to get converted into reality. The biggest risk obviously still remains vaccine distribution. and to some extent a new variant of coronavirus. There's still some uncertainty around it, but a hell of a lot less than this time 90 days ago. So we're feeling very good as we put together our budget for the year. We basically took assumptions that, you know, first quarter is always a slow quarter for us, but this year will be slow as well for all the reasons I just stated. But then pipelines start to build up and we start executing on a growth strategy somewhere in the second quarter but really bringing it in in the second half of the year. Quickly looking back for this quarter, I'm very happy with the results. We announced 89 cents per share, 85.7 million in earnings. That compares to 70 cents last quarter, and if you compare it to fourth quarter of 2019, which feels like 100 years ago, it was 91 cents. So not bad for what we've gone through this year to come out just very close to where we were fourth quarter of 2019 from an EPS perspective. Then, sorry, NII was 193 and change million, which was six million more than our last quarter, about $8 million more than fourth quarter of 2019. PPNR was down about 10 million compared to last quarter, but showed a little increase compared to fourth quarter of a prior year. Leslie will walk you through this, but there are some unique items in the expense category, mostly having to do with compensation. We had reduced our variable compensation accrual quite dramatically in the second and third quarter, and we've adjusted that back up. Not all the way back up. Variable compensation will still be much lower than in previous years, but just not at the rate that we were accruing in the second and third quarter. That's one part of that adjustment. There's some We made a change in policy to give rollover pay time off due to the circumstance that we're in to our employees. That costs a couple of million bucks. And then there's an accounting thing which Leslie will walk you through. I'm not smart enough to walk you through that. The big story obviously continues to be deposit generation as well as deposit costs. We have another solid quarter. Total cost of deposits declined by 14 basis points. We were at 57 basis points last quarter. This quarter, we ended up at 43. And if you look at our stock cost of funds at December 31st, we were at 36. So in other words, we're starting this quarter already at 36 and working our way down from there. So I feel pretty good. that this quarter will be another very strong quarter in terms of reducing cost of funds. I think we'll end up in the low 30s, and on a spot basis, I feel pretty confident that we will end up with a two-handle. So that's sort of the cost side, but also our average DDA, non-interest DDA, grew by $966 million, which is, again, very, very strong. I will repeat what I've always said. You know, one quarter doesn't make anything, You should always look at a four-quarter average or four-quarters of last 12-month numbers to really get a feel for how the business is doing. But no matter how you look at it, this last four quarters or the last quarter, there's just been a very, very strong performance in the department side. Our knowledge of ZDA now stands, by the way, at over 25%, and I think a year ago we were at 18%. Still more work to be done here. We are expecting this trend to continue into next year. and for us to slowly work our way towards 30% DDA. As we have predicted, risk rating migration has slowed quite significantly. I think for the first nine months of 2020, there was downward rating migration on $2.1 billion in loans. This quarter, it was $169 million. Provisioning came down very, very materially. In fact, we have a net recovery of a small number of 1.6 million. Also, we had reported back in the summer 3.6 billion in loans that were on deferral, if you remember. That number is now down to 207 million or about 1% of total loans. We do have 587 million in loans that were modified under the CARES Act. As you know, under the CARES Act, these don't show up as TDRs. But nevertheless, these modifications, by the way, are mostly IO modifications for 9 to 12 months. A lot of these modifications are in the CRE, the hospitality portfolio, the hotel portfolio. And we believe that most borrowers who are going to come to us for temporary relief or deferral have been identified at this point. NPLs ticked up a little bit to $244 million, which is about 1.02% of loans, but excluding the government-guaranteed SBA loans that are in this bucket, if you take that out, it's about 80 basis points. In our CNI subsegment, actually, NPLs declined. The net charge-off rate was stable at 26 basis points for the year. Let's talk a little bit about NIM. Last time we met at this call, we had talked about NIM being stable, maybe slightly up, which is exactly what happened. NIM was 233 for the quarter. I think last quarter it was 232, so one basis point improvement. Total loans grew by 87 million, and deposits grew 899 million total, of which 219 was non-interest DDA. These are spot numbers. What I gave you earlier was average DDA. Book value is now up at $32.05, which is higher than what it was at this time last year. It was $31.33. Capital position is strong. The board met yesterday and reinstated our share buyback program. If you remember, when we stopped it, we still had about $45 million left, so that authority has been unfrozen, and then the board wants us to get through this, and then we'll meet again to talk about additional repurchases. Capital is at 12.6 at Holco. It's 13.9 at the bank. And we, of course, declared our usual 23 cents per share dividend. Strategy for return to work. Let me talk a little bit about this and going forward. Not much has changed in terms of our positioning for return to work. We still are working remotely. And we expect to do that for at least the next two or three months and then make a decision beyond that at that time. There have been more COVID cases in the company, as you would expect, in this quarter than in previous quarters, but none that are serious enough to have impacted any of our operations. The strategy going forward, again, you know, we're waiting very anxiously for economic activity to pick up. and for us to start participating in the next business cycle, which, as we speak at the beginning, right about now. The focus will stay the same, which is to build a relationship-based commercial bank with a focus on small and middle market businesses. Stay focused on building core business through non-interest DDA, identifying niche markets that the big guys don't pay much attention to, investing in technology and innovation, and not just in branches and locations. The game has really become about technology and solving customer pain points through innovation. Also, we haven't lost sight of all the initiatives we had in 2.0. That was not just an exercise in time that you do and then forget about. It really was about changing the culture, and we will keep pushing forward on that front as well. We did launch a new initiative earlier last year. We did not make a lot of big deal about this, but I do want to mention it on this call. It's called ICARE, which stands for Inclusive Community of Advocacy, Respect, and Equality. It is something that, you know, been in the works since summer of last year, but we really announced it inside the company about two, two and a half months ago and gotten a very positive feedback. It really is our effort as an organization to push and build a culture that celebrates and intentionally promotes diversity within the bank. This is not just words. This is we're putting our money where our mouth is and taking on initiatives. We think if we can do our bit and move things in the right direction by an inch and everyone does that, it will make a big difference in society. So we're very excited about this. Our employees are very excited about this. And more to come on this in the future. Let me see here. Let me turn this over to Tom, and he's going to walk you through a little more on the business side before Leslie gets into the numbers. Tom?