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BankUnited Inc. (BKU)
Q4 2012 Earnings Call
January 29, 2013 9:00 am ET
John Kanas – Chairman, President, Chief Executive Officer
Douglas Pauls – Chief Financial Officer
Mary Harris – Senior Vice President, Marketing and Public Relations
Ken Zerbe – Morgan Stanley
Robert Placet – Deutsche Bank
Brady Gailey – KBW
Gerard Cassidy – RBC Capital Markets
Russell Gunther – Bank of America Merrill Lynch
Joe Fenech – Deutsche Bank
Michael Rosato (sp) – (unknown)
Previous Statements by BKU
» BankUnited CEO Discusses Q1 2012 Results - Earnings Call Transcript
» BankUnited CEO Discusses Q3 2011 Results - Earnings Call Transcript
» BankUnited's CEO Discusses Q2 2011 Results - Earnings Call Transcript
I would now like to turn the call over to Ms. Mary Harris, Senior Vice President of Marketing and Public Relations. Please proceed, ma’am.
Good morning and welcome. It’s my pleasure to introduce John Kanas, BankUnited’s Chairman, President and CEO.
But first I’d like to remind everyone that this call contains 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. The company generally identifies forward-looking statements by terminology such as outlook, believes, expects, potential, continues, may, will, could, should, seeks, approximately, predicts, intends, plans, estimates, anticipates, or the negative version of those words or other comparable words. Any forward-looking statements contained in this call are based on the historical performance of the company and its subsidiaries or in 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 relating to the company’s operations, financial results, financial condition, business prospects, growth strategy, and liquidity. If one or more of these or other risks or uncertainties materializes, or if the company’s underlying assumptions prove to be incorrect, the company’s actual results may vary materially from those indicated in these statements. These factors should not be construed as exhaustive.
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, 2012, available at the SEC’s website, www.sec.gov.
Now I’ll turn it over to John. John?
Do you have that memorized?
Good morning everybody. Clearly we’re pleased and we’re anxious to talk with you all this morning. The quarter was extraordinary and it topped off an extraordinary year for us. I’m going to speak to you only briefly about the high points as I see them looking back over 2012, a couple comments about the future. With me is Doug and Leslie and Raj and John Bohlsen, and between us we will answer any questions that you have.
The quarter was driven by principally three things: obviously the better results in the sale of loans than we had been accustomed to in the past had an impact on the quarter, a pretty big impact on the quarter, and on the net interest margin. Doug will be happy to fill you in on the details of that. I remind you that in past years, we’d always sustained a significant loss on the sale of these assets in the fourth quarter, and we could see that as the economy is improving we’re getting a lot more action in these auctions. You can see that we got almost 40% of the UPB on these loans this time compared to less than 30% in the three years before—an average of less than 30% in the three years before, so we expect that those kind of numbers will continue as the underlying economy continues to harden.
New loan growth is obviously a big driver and a marker for the success of our strategy down here in Florida, including loans we purchased. The annualized growth rate of loans in the quarter was 55%. We continued to see improvement in that area, and we continue to gain market share on our competitors down here in Florida. A year ago, if you would have asked me where the loan growth was coming from, I would have said essentially 100% of it was coming from pirating away market share from competitor banks. We are now beginning to see – and it’s really two quarters old – we’re beginning to see a noticeable improvement in the south Florida economy, which is contributing to that loan growth as well. If I had to guess, I’d say it’s still 75% market share gain but 25% of it is coming from a growing economy, particularly in south Florida.
We opened nine new branches this year and are almost done with our expansion in physical branches in Florida. We’ve got seven to go this year ahead of us, but only one of those will be a new location. Six of them are clean-ups of old branches.