BankUnited (BKU) investor relations material

Executive summary

• Net income for the quarter was $71 million, with diluted EPS of $0.97, up 7% year-over-year, and ROE improving to 9.3% from 8.1% last quarter.

• Achieved record non-interest demand deposits (NIDDA) to total deposits ratio of 34.4%, nearing $10 billion in NIDDA, reflecting a decade of organic growth without acquisitions.

• Net interest income rose to $255.3 million, up $9 million year-over-year and $6 million sequentially, with net interest margin (NIM) at 3.06%, up 13 bps year-over-year.

• Core deposits and NIDDA both exceeded guidance, with NIDDA up 13% year-over-year and core deposits up 7% year-over-year.

• Lending growth lagged guidance due to competitive pressures and strategic exits, but pipelines for Q3 and Q4 remain strong.

Financial highlights

• Fee income was strong, with service charge income up 18.6% year-to-date and total non-interest income at $29 million, up $1 million year-over-year.

• Charge-offs dropped to $6.4 million from $36 million last quarter; non-performing loans (NPLs) down $51 million (19%) sequentially and $152 million (40%) year-over-year.

• CET1 capital ratio at 12.3%, up 10 basis points, with tangible book value per share at $40.48, up 6% year-over-year.

• Non-interest expense increased to $175 million, up $11 million year-over-year, mainly due to higher compensation and deposit-related costs.

• Loans to deposits ratio: 82.9%.

Outlook and guidance

• Loan growth guidance revised down to 4%-5% from 6% due to competitive market and strategic exits; NIDDA average balance guidance raised to 12%-13% growth.

• Net interest income and revenue growth guidance lowered to 5%-6% for the year, with full-year NIM at 3.08%.

• Non-interest income forecasted to rise 7%, expenses to increase 5%, and credit provision between $68-$72 million.

• CET1 capital ratio expected at 11.8% by year-end.

• Expectation of one rate hike in Q4, with modest asset sensitivity to rising rates.