BankUnited, Inc.

Good day, and thank you for standing by. Welcome to the Bank United, Inc. first quarter 2022 earnings call. At this time, all participant lines are in listen-only mode. After the presentation, there will be a question and answer session. To ask a question during this session, you'll need to press star, then 1 on your telephone keypad. Please be advised, today's conference may be recorded. If you require operator assistance during the call, please press star, then 0. I'd now like to hand the conference over to your host today, Susan Greenfield, Corporate Secretary. Please go ahead.

Thank you, Liz. Good morning, and thank you for joining us today on our first quarter 2022 earnings 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 around 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 conditions, business prospects, growth strategy, and liquidity, including as impacted by external circumstances outside the company's direct control. The company does not undertake any obligation to publicly update or review any forward-looking statements, 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 statement. Information on these factors can be found in the company's annual report on Form 10-K for the year ended December 31st, 2021, and then the 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. Thank you for joining us for our earnings call. Let me start by some comments about the economy and our markets that we are in. and generally how we see the outlook for things that we don't control but impact our business. Then we'll get into our numbers, and then Tom and Leslie will follow me with more detail. So the Main Street view, which is the view that we get from talking to our clients day in and day out, is actually very healthy. We are seeing a robust economy. in Florida have been for quite some time. And even New York has improved quite a bit over the last couple of quarters. So we have nothing really to complain on the economic front. Growth is strong. Personal and business balance sheets are strong and healthy. Of course, the usual issues with labor constraints and inflation, that's nothing new. But overall, home prices are up. Residential markets are robust. So The mainstream view that I will bring to you at this time is very healthy and strong. Then there's the other view, which is the capital markets view, which we get by looking at our Bloomberg screens all day long these days. This was a very volatile quarter and probably the most volatile quarter in quite some time. So especially in fixed income, we saw obviously the yield curve go up to where it is. But we also saw spread widening pretty much across the board in fixed income assets. So that gives us a little bit of pause when we think about sort of the medium to long term, as in maybe next year, that there may be a slowdown. Again, that can change. We'll keep monitoring it. But those are the sort of inputs we're taking into account as we are thinking about how to execute the strategy. quickly getting into the financial results for the quarter. Earnings came in at about $67.2 million, or 79 cents per share. NIM expanded. I think last quarter we were at 244. This quarter we came in at 250. Just for comparison, last quarter I know there was a lot of noise in the numbers, but if you go back to quarter one of last year, we were 239. Cost of deposits came down again to 17 basis points for the quarter. I think we ended the quarter for spot balances. The deposit pricing was around 16 basis points. I think this is the bottom in terms of deposit pricing, to state the obvious. Fed is going to raise rates fairly aggressively from what everyone is talking about. It looks like this quarter there will probably be 100 basis points increase between the May and the June meeting. So I think the positive pricing will start to rise from here on. But it's nice that we were able to work it down to 16, 17 basis points. If you remember last time the Fed reduced rates, started raising rates in the last cycle, Our cost of funds bottomed out somewhere in the 50, 55 basis point range. So we're very happy with what we've been able to do with our deposit franchise. By the way, we also had $688 million of DDA growth this quarter. So that momentum continues. Total deposits did shrink. That was deliberate effort actually started last quarter, fourth quarter, and into mostly done in this quarter. We did shrink our deposits, interest rate deposits, but DDA. And the DDA growth that we got, the $688 million, was pretty widespread. It came from all parts of the company. It came from all geographies to do business in. So it wasn't concentrated in any one area. And even before I get the question about how much of this was core, it wasn't. I'd say a vast majority of it was core. There's probably a couple of hundred million which would fall into the category of just money moving around at the end of the quarter. So outside of that, everything was core deposit growth. Average loans increased $586 million, but end-of-period loans declined $227 million. The biggest driver in that decline is mortgage warehouse business, which came down roughly $400 million, which is returning to its normal seasonal trend. Utilization dipped into the 30s. which is what happens in March the last couple of years because of the pandemic. They've been sort of outlier years, but now we see that business returning to its normal cadence, which is March being the slowest time in terms of utilization, and then it starts to build from here into June and generally into the third quarter before starting to slow down in the fourth quarter again. So we're seeing that return. And our other businesses are also seasonal. First quarter is always our slowest quarter, even outside of the mortgage warehouse business. And so we're seeing that. But in terms of pipelines, we're pretty excited about what we're seeing in our pipeline, both CNI and CRE. I think this will be the year CRE will grow. We've been shrinking CRE for many years, but we see momentum in that and look forward to that optimistically. Just taking a 12-month view, which I often say, you know, you should always look at, you know, on a 12-month rolling basis instead of looking at any one quarter. So I had these numbers just pulled, you know, quickly before this call. Over the last 12 months, NIDDA, a non-interest DDA, grew $1.7 billion. Our total deposits grew about $800 million, $809 million, and this is all excluding, and loans excluding PPP grew $841. So the loan growth deposit growth is roughly in line And DDA was really the big story. Credit, really quick, nothing but good news here. Again, as expected, but nevertheless good to see the numbers. NPL declined from 87 basis points to 65 basis points. And by the way, if you carve out the guaranteed portion of the SBA loans, then the NPL stood at 47 basis points. Criticized classifieds. which have been declining steadily every quarter. That trend continued. It came down by another $280 million, which we're happy about. And annualized net charge-off rate came in at 15 basis points. Just to put it in context, last year, for the full year, we were at about 29 basis points. Our buyback program, we bought back $82 million of stock in the first quarter. You already know that we increased our dividend by $0.02 to $0.25 a share. And I expect that we will burn through this entire buyback authorization sometime in the second quarter. And when we do, we will go back and talk to our board, and I expect there will be another authorization which will be coming shortly after that. In terms of, you know, we gave you guidance on loans and deposits and expenses and margin and so on. We stand by all the guidance we gave you. So we're reaffirming everything and we're feeling good about what 2022 is shaping up to be. Putting aside the numbers, just a couple of other updates. We did come back to the office in the first week of March, so we are in the new normal now. So after many false starts with the virus and what have you, we eventually are back to the new normal. And it has gone well, you know, as long as you exclude the fact that Tom, Leslie, and I all got COVID very quickly after returning to the office. Other than that, everything has gone just fine. And we're fine. We're healthy. You've heard me talk a lot about the vision of the company and what we're trying to build long-term, which is a relationship-based middle market, small business bank. A relationship-based bank, our most important currency is trust, trust that our customers put in us and even our employees and our regulators and everyone puts in us. This is something that makes me really proud. Newsweek announced that they ranked all the banks in the country on a trust factor, and we were ranked number fourth most trusted bank in the country, and we're very proud of this achievement, and we're celebrating it in the company. Quickly on Atlanta and Texas expansion, we have hired the head of the CNI business, the head of the CRE business, Our head of healthcare practice, which is a vertical, already is in Atlanta, so that bench strength is getting in place, and we are moving into our offices, I think, within the next week or so. Same thing in Atlanta. We received approval for our branch just a couple of days ago, and we opened the doors, I think, next week. The team is hired, trained, and ready to go. So all good news and progress over there. In fact, in Atlanta, I think we've already booked our first piece of business, a pretty marquee name on the CNI front. We did that loan just a couple of weeks back. So with that, let me turn it over to Tom for a little more deep dive into the numbers.