BankUnited, Inc. (BKU)

BKU 
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BankUnited, Inc. (BKU)

Q2 2013 Earnings Conference Call

July 24, 2013 9:00 am ET

Executives

Mary Harris – Senior Vice President of Marketing and Public Relations

John A. Kanas – Chairman, President and Chief Executive Officer

Leslie Lunak – Chief Financial Officer

Rajinder P. Singh – Chief Operating Officer

Analysts

Robert Placet – Deutsche Bank

Brady Gailey – Keefe, Bruyette & Woods

Matthew Clark – Credit Suisse

Herman Chan – Wells Fargo Securities

Matthew Lee – Inner City Press

Presentation

Operator

Good day, ladies and gentlemen and welcome to BankUnited Incorporated 2013 Second Quarter Earnings Call. My name is Sandra and I’m here as operator today. At this time, all participants are in a listen-only mode. We will conduct a Q&A session towards the end of the conference. (Operator Instructions) As a reminder, this call is being recorded for replay purposes.

And now I would like to hand the call over to Mary Harris, Senior Vice President of Marketing and Public Relations. Please go ahead.

Mary Harris

Good morning. It’s my pleasure to introduce our Chairman, President and CEO, John Kanas. 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 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 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 materialize, words of 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 considered 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 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 SEC’s website, www.sec.gov.

Here’s John.

John A. Kanas

Good morning everybody, obviously we’re happy to report our second quarter results. This is the first quarter for me that has been significantly impacted by our presence in New York and as we had anticipated New York has begun to make a serious contribution to loan growth, $0.52 a share for the quarter, a little better than the market had expected to see from us.

New loans grew at a pace of about $1.1 billion for the quarter that’s broken up as follows, that’s about rounding here about $260 million out of New York commercial out of New York, about $340 million out of commercial out of Florida, and then the remaining $450 million is a combination of our indirect lending platform, our leasing companies and residential mortgages.

Deposits for the quarter have reached $9 billion with the demand deposits now reaching 24% and total deposits, a target that we set for ourselves earlier this year; net interest margin, a little bit stronger than we had given you guidance on at above at 614.

We really have completed our current plans to build out in Manhattan by opening two additional banking centers in the second quarter and that brings us now to four branch locations in Manhattan and one about halfway out Long Island on Route 110 in Melville.

Deposit course continue to trend down, 64 basis points for the quarter down from 70 basis points in the prior quarter and significant gain in tangible book value to $18.43. Deposit growth in New York, all-in it’s about $100 million so far this year. That deposit growth tends to lag loan growth in these new initiatives since the loans that go on the books right away and a lot of deposit relationships are fairly complicated and complex and it takes a while to get them open and up in running. But we are well underway to seeing significant in more deposit growth come out of the New York market.

We talked to you last two quarter about the fact that New York, we viewed New York as a significant outlet to allow us to grow loans and to diversify our risk between South Florida and New York and that is exactly what’s happened as the result of that has been, we’ve now gotten our loan to deposit ratio up to just about 75% from roughly 65% at the beginning of the year.

Loan quality as you can see has remained stellar for us. We continue to work off the FDIC assets, although at a declining rate and we are feeling very good about the fact that interest rates in the marketplace while we believe are beginning to move and will continue to increase over the next year or two, the timing of that is perfect with our entering into to the New York market, and certainly rather being entering now at this stage in the interest rate cycle than six months ago before this was as predictable as it now seem to be.

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