BankUnited, Inc.

Good day, and thank you for standing by. Welcome to Bank United fourth quarter and fiscal year 2024 earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you'll need to press star 11 on your telephone. You will then hear an automated message advising you your hand is raised. To withdraw your question, please press star 11 again. Please be advised, today's conference is being recorded. I would now like to hand the conference over to your speaker today, Jackie Bravo, Corporate Secretary.

Please go ahead. Thank you, Michelle. Good morning, and thank you, everyone, for joining us today for Bank United Inc.' 's fourth quarter 2024 results conference call. On the call this morning are Raj Singh, Chairman, President, and CEO, Leslie Lunek, Chief Financial Officer, and Tom Cornish, 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 reflect 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 those related to the company's operations, financial results, financial condition, business prospects, growth strategy and liquidity, including as impacted by external circumstances outside of the company's direct control, such as adverse events impacting the financial services industry. 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. These factors should not be construed as exhaustive. Information on these factors can be found in the company's annual report on Form 10-K for the year ended December 31, 2023, 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. Rajni.

Jackie, thank you. Welcome, everyone. Thanks for joining us. I know it is a busy earnings day. We'll try to wrap this up in an hour or less. We're reporting an exceptionally strong quarter and a very good finish to the year, a pretty good year for Bank United. The earnings release has been out for the last hours or more I'm sure a lot of you have already gleaned through it. Since it's a busy day, and if you don't get to see all of the numbers we've put out and all the supplemental information we've put out, if there's only one page that I would like you to focus on, it would be a new slide that we added in our board deck, which is slide number six. It kind of lays out the progress that we've made as a company, not just last quarter, but over the last year, quarter by quarter. That is, you know, like I said, if you don't read anything else, that's the only page you focus on. You'll get the gist of what we're going to say today. And also, you know, we'll provide some guidance for next year as well. So what does page six say? And here I will take a little bit of time. It lays out EPS, net interest margin, ROA and ROE for every quarter over the last five quarters. And The actual numbers are important, but what's more important is the trend that you will see in those numbers. And by the way, these numbers have been adjusted for the FDIC special assessment charge in fourth quarter of 2023. Our EPS grew from, you know, fourth quarter of 23 was 62 cents, first quarter was 64, second quarter was 72, third quarter was 81, and we're just announcing today 91 cents. Likewise, our margin, which fourth quarter of 23 was at 260, actually went down a little bit to 257, that's a seasonal adjustment, went up to 272 to 278 to 284. That's what we are announcing today. ROA was 52 basis points back then, went up to 54 to 61 to 69 to 78, which is what we're announcing today. And ROE, which was at 7.3% then, stayed at 7.3 in the first quarter to 8% in the second quarter to 8.8 in the third and 9.7 this quarter. So there's a lot of metrics on our scorecards and a lot of things we look at, but eventually it all boils down to these three or four things. And no matter how you look at this, this has been a phenomenal year of delivering on the things that we set out to deliver that we talked to you about this time last year. So I'm very happy to report net income came in at $69.3 million, $0.91 a share. I always ask the day before earnings, I turn to Leslie and say, please, could you pull up your EPS estimates for us? What is the consensus? And I think yesterday she told me the consensus was $0.73. So I'm happy that we're significantly above where the consensus was. And $0.91 is better than the $0.81 that we reported last quarter. So great progress over the quarter as well. Now, the place where we really outperformed, even to our own expectations from three months ago, was really on the margin. We thought margin, based on our internal assumptions, was going to be flat at best this quarter, but we actually did much better. We came in six basis points higher at 284 from 278 last quarter, and that's mostly because on the deposit side, we did much better than we thought we would. You know fourth quarter, is a seasonally difficult quarter because of certain of our businesses do lose deposits, and they did lose deposits this quarter. But our other businesses made up for those, and the deposit story came out much better. So quickly going through the deposits, the cost of deposits came down very nicely. It has declined by 34 basis points to 272 from 306 last quarter. Cost of interest-bearing deposits actually came down 45 basis points to through 375. It was 420 last quarter. And on a spot basis also, we came down to 263 from 293. Now, despite all the seasonal headwinds that I just mentioned in some of our businesses, average NIDDA, instead of going down, actually went up. It was up 173 million, which is what feeds into the better-than-expected margin story here. And, you know, just a shout out to all our business lines who contributed to that. So I know a number of them are on the line. Ending NIDDA was basically flat, was declined only by $19 million. So, you know, much better than what we were expecting. Loans were down $101 million, mostly because of the runoff that we've already talked to you in Resi and some of our non-core portfolios, like leasing and franchise finance. So if I look back over the year, NIDA DDA grew, so non-interest DDA grew by $781 million for the year. Total deposits grew by $1.3 billion. Non-brokered grew by $1.4 billion. And wholesale funding, which has also been a big priority for us taking it down, was down $2.3 billion for the year. Core CNI and CRE grew by $470 million for the year. And resi and non-core loan portfolios declined by 959 million. Our loan-to-deposit ratio now stands at 87.2%. A year ago, it was close to 93%. I think it was 92.8%. Credit still looks solid. I think this year we clocked net charge-offs at 16 basis points for a commercial bank. I still think that is a fantastic number. NPAs are very manageable at 63 basis points. This excludes the guaranteed portion of SBA loans. NPLs did go up $26 million this quarter, all attributable to one office loan. But we've seen that coming for a while, and we are properly reserved for it. Capital, set one is at 12%. And if you include the AOCI and then run it again, it's at 10.9%. TCE to TA ratio is now at 7.8, and book value per share keeps going up. It's at $36.61. So quickly, before I hand it over to Tom and Leslie, I want to talk about, you know, this is the time we give guidance for the year. But before I give guidance for this year, let me just kind of step back, you know, a year ago, what did we say and where did we end up? So last year, this time, we had said that balance sheet would remain essentially flat, and that's what happened. We were down like 1%. We said deposits, that NIDDA would grow double digits. We grew at 11.4%. We said total deposits grow mid-single digits. We grew at 5%. We said non-broker total deposits would grow slightly more, and yes, they did. We grew at 7%. We also said that we would pay down, continue to pay down wholesale funding. We paid it down by $2.3 billion. We guided that the margin would end up in the high twos by the fourth quarter. We ended up at $2.84. We said that there'd be a mid-single-digit increase in NII, where it was up 5%. We also said that expenses would be mid-single-digits, excluding the FDIC assessment. It came out at 6%. Loans, we initially had said that loans will be, you know, total loans will be up low single digits and commercial would be up high single digits. There on the commercial side, we missed a little bit. It was a little lighter than what we thought, mostly because the payoffs, which are much harder to predict, were much higher. Production actually came in just fine. It's the payoffs that surprised us. And by the way, along this, we also said we will continue to build our ACL, which we did. We started the year at 82 basis points. We ended the year at 92 basis points. So in other words, in terms of everything that we said we were able to deliver, it makes me very, very happy. And it all results in basically ROA, ROE, EPS all moving as substantially as they have. So this has been a very good year. Now, guidance for next year, this will feel like a deja vu moment because I'm going to give you the same guidance I gave last year, which is that So no major changes in fundamental strategy. We still want to keep improving the profile of the left side and the rights of the balance sheet to improve our metrics. Number one priority has been and will continue to be growth in NIDDA. That is the most important driver for us achieving what we want to. NIDDA, we'd like it to grow double digits again. total deposits should grow mid-single digits. There's not much in terms of paying down wholesale. We paid down so much of it, but on the margin, we'll probably pay that down as well. Loan growth, again, same thing. guidance as last year, that non-core and resi will continue to decline, and commercial and CRE will grow high single digits, and total growth will end up somewhere in between. Expenses, similar to last year, mid-single digits growth in expenses. And on margin, sometime later this year, we should get past 3%. That's what we're going, you know, it's hard to say exactly when it will happen. but it'll be in the later half of the year that we should get to 3% and hopefully beyond that. So if we are able to deliver all those things the way we've laid out, you know, I'll be able to hopefully come to you again next year and show you a chart like the one we're showing on page six and even better numbers at this time next year. I do want to remind that there is seasonality in the business and Leslie will We'll probably put a finer point to it, both in our deposits and our lending. So just be aware of that. Deposits are generally much stronger in the first half of the year, not less so in the second half, and loans are generally the second, third, and fourth quarter, first quarter being a difficult one to underwrite new business in given the end-of-the-year stuff. But other than that, am I missing anything, Leslie, Tom?