BankUnited, Inc. Q4 FY2025 earnings call

Management Statement and Operational Highlights

• Year in Review: 2025 was a strong year with double-digit EPS growth driven by double-digit earnings, PPNR, and NIDDA growth, resulting in a 22 basis point margin expansion.
• Fourth Quarter: Earnings were $69.3 million ($0.90 per share), with adjusted EPS of $0.94 after accounting for software write-downs. PPNR for the quarter was $115 million. Margin expanded to 3.06%, up 22 basis points year-over-year. Core loans grew by $769 million. Credit: Criticized classified loans and NPLs declined, but provision and charge-offs were elevated due to a $10 million fraud loan write-off. Capital: CET1 was 12.3%, pro forma CET1 (including AOCI) was 11.6%, tangible common equity to tangible assets was 8.5%, and tangible book value per share was $40.14 (10% year-over-year growth). The board authorized a $200 million additional share buyback and increased dividends by 2¢.

Segment Performance

• NIDDA: Fourth quarter NIDDA grew on a spot basis by $485 million, with annual growth of $1.5 billion. Average NIDDA for the quarter was up about $505 million, and annual average NIDDA growth was $844 million. NIDDA now stands at 31% of total deposits.
• Loans: Core loans grew by $769 million in the quarter. Commercial real estate (CRE) grew by 9%, with total exposure of $6.8 billion (28% of total loans) and well-diversified across asset classes. RESI was down $148 million, while franchise equipment and municipal finance were down a combined $50 million.
• Deposits: Total deposits increased by $735 million during the fourth quarter and by $1.5 billion for the year. The spot cost of deposits declined by 21 basis points to 2.10% at the end of the year.

Guidance

• 2026 guidance includes core loan growth of ~6%, total loan growth in the 2-3% range, deposits NIDDA growth at the 12% rate, revenue growth of 8%, margin expected to improve to 3.20%, expenses controlled, and provision similar to 2025. The board announced a $200 million additional share buyback on top of the previously authorized $100 million.

Risks

• Credit Risks: Unexpected fraud and lumpy credit hit costs, such as the $10 million fraud loan write-off in the fourth quarter.
• Market Risks: Impact of external events on the financial services industry and uncertainty regarding interest rate cuts beyond initial expectations.

Q: Good morning. Wanted to start on the fourth quarter non-interest-bearing deposit growth...

A: Rajinder P. Singh stated that deposit growth was even across business lines with no outliers, and average NIDDA is the right measure. He also discussed deposit beta assumptions and the mix of new and expanded wallets.

Q: Hey, guys. Good morning, guys. Thanks for taking my questions. Good morning. Maybe we could just start on the deposit growth...

A: Thomas M. Cornish and Rajinder P. Singh discussed deposit growth sources, including new markets and expansions, and Jim Mackie touched on deposit beta and broker deposit percentages.

Q: Hey, good morning, guys. Thanks for taking my questions. Good morning. Maybe we could just start on the deposit growth...

A: Rajinder P. Singh and Thomas M. Cornish talked about CRE growth, market competition, and credit fraud details. Jim Mackie discussed provision guidance and credit trends.

Q: Hey. Good morning. Tom, quick question circling back to the loan waterfall...

A: Thomas M. Cornish discussed payoffs, production, and loan growth expectations, while Rajinder P. Singh and Jim Mackie commented on spread tightening and loan origination yields.

Q: Thanks. Good morning. Jim, maybe a question for you. Most of my questions have been asked, but just puts and takes on the expense outlook...

A: Jim Mackie discussed expense investments in revenue-producing staff, technology modernization, and geographic expansions. Rajinder P. Singh and Thomas M. Cornish commented on New York and Florida business performance.